The demand for steak is decreasing

As Americans prepare to fire up their grills for the Fourth of July, they are facing the highest beef prices on record.

Yet despite the sticker shock, demand for beef and beef remains steady.

Beef prices rose after the US cattle herd shrank to its smallest in decades following drought, high feed costs and herd culling. The resulting reduced supply has driven up cattle prices and, ultimately, the cost of beef in grocery stores and on restaurant menus.

Although prices eased slightly in May after reaching record highs in the spring, consumers are still paying near-record prices for ground beef and steaks. The average price of ground beef was $6.75 per pound in May, according to data from the US Bureau of Labor Statistics, up nearly 13% from a year ago and just below April’s record high of $6.90. Beef prices averaged $12.80 per pound, up 16% from a year ago and the second highest level on record.

But so far, consumers don’t seem willing to abandon their summer tanning traditions. The intensity provides another clue to consumer behavior at a time when investors are watching for signs of where and when higher prices are causing buyers to pull back.

“We’re seeing customer demand for steaks remain very high, with a shift toward more premium and organic options,” a Kroger spokesperson told CNBC. “We’ve also seen beef continue to be a favorite during recent holidays, including Easter and Memorial Day.“

Beef generated the most dollars of any food category before Independence Day, with sales up nearly $352 million compared to last year, according to data from NielsenIQ.

“Consumers go on vacation with a sense of purpose, making multiple trips but with one clear goal after another,” the consumer research firm said in a June report.

As the demand for beef rises, consumers have shown clear preferences within the category.

NielsenIQ said consumers are increasingly viewing steakhouses as the center of special occasions: an “affordable pleasure” where they are willing to pay more for quality and experience, while finding savings elsewhere when shopping for groceries.

The data also suggests that consumers are not simply looking for the cheapest protein. Instead, many put more emphasis on quality.

Consumers reported increasing preference for quality claims such as USDA Prime (42%), no added hormones (40%), grass-fed (37%), and no antibiotics ever (36%) when purchasing meat, according to NielsenIQ.

“Consumers are looking beyond the label and into the story behind the meat,” the company said. “Claims linked to quality and availability are becoming more and more powerful as consumers seek confidence.”

This demand has also benefited others in the industry, such as Omaha Steaks, which told CNBC that consumers continue to prioritize steak gifts as they cut back elsewhere.

“Customers are still celebrating dad with premium protein, but they’re also thinking about the value and functionality of variety,” said Nate Rempe, president and CEO of Omaha Steaks last month as Father’s Day approached.

The company said it has seen continued growth in its USDA certified high-end tender file, which recently introduced price reductions, with sales up 25% in the weeks leading up to Father’s Day this year compared to 2025.

Restaurants also reported seeing benefits from the dynamic. LongHorn Steakhouse, among others, has seen an increase in restaurants looking for steaks.

“Guests know they are getting high quality steaks when they come to LongHorn [Steakhouse],” said Rick Cardenas, CEO of the chain’s parent company Restaurants in Darden. “They’re getting a lot of value. And it doesn’t hurt that there’s a high level of inflation in the beef market. And so the relative value looks a little bit better.”

The key question for investors is how long the dynamic can last. Rebuilding the US cattle herd could eventually increase beef imports and ease prices, but that process takes years without the help of foreign supplies.